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Wednesday, October 29, 2014

Stock Forecasting With Machine Learning - Pop-Quiz

A few years back, I decided that machine learning algorithms could be designed to forecast the next day's Open, High Low, Close for the SP500 index. Armed with that information, it would be a cinch to make $Millions !

The following chart shows the initial design of the Neural Network:

As it turns out, this ML model did not work. In fact, this approach is completely wrong ! Can you think this through and come up with reasons why ?

(Note: This slide was taken from a recent presentation entitled "Building Effective Machine Learning Applications").